The week kicked off on a mixed note as investors digested the latest developments surrounding the new US fiscal package.
Over the weekend, President Donald Trump signed a series of executive orders aimed to support the US economy. Interestingly, equity markets across the globe pushed higher despite the uncertainty over when these measures would be enforced.
In our technical outlook, the currency spotlight was the GBPUSD which remained trapped in a wide 200 pip range with support at 1.3000 and resistance at 1.3200. Prices are trading around 1.3100 as of writing despite the UK economy officially entering a recession for the first time in 11 years!
Global sentiment received a solid boost mid-week after Russia announced that it registered the word’s first coronavirus vaccine. This welcome development fuelled appetite for riskier asset at the expense of safe-havens with Gold experiencing a “healthy” pullback below $1900. Rising bond yields played a role in Gold’s steep decline with US 10-year treasury yields rising to their highest level since early July.
As the impasse in Washington reverberated through financial markets, equity bulls remained unchained and unfazed. Risk-on is clearly in play with the S&P 500 trading very close to all-time highs as of writing despite the negative themes weighing on global sentiment.
If there was one word to describe the market performance over the past six months, the only word that comes to mind would be "surreal"!
Dollar struggles to rebound
It was not the best of trading weeks for the Dollar Index. Prices remain under pressure on the daily charts with a breakdown below 93.00 opening a path towards 92.20.
USDCAD breaks below 1.3250
After securing a daily close below the 1.3250, the USDCAD has the potential to extend losses in the week ahead. Prices remain bearish with the next key level of interest at 1.3100.
AUDNZD eyes 1.1000
This currency pair is bullish on the daily charts. A solid weekly close above 1.0850 could instil bulls with enough inspiration to challenge 1.1000 in the near term.
GBPJPY breakout in play
The breakout above the 139.00 resistance level may signal further upside in the short to medium term. 139.00 could transform into dynamic support that opens a path towards 141.00.
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